CHONGQING: Facts & Figures

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Chongqing always functions as the largest industrial and commercial center, and the traffic pivot at the upper reaches of the Yangtze River and southwestern China. Since it became the only municipality directly under the Central Government in West China in 1997, the economy of Chongqing has been soaring, and Chongqing has cultivated a sound investment environment, making Chongqing an ideal destination for domestic and overseas investors in West China. In March 2007, during the period of National People’s Congress and Chinese People’s Political Consultative Conference, General

Secretary Hu Jintao attended the meeting of Chonqqing delegation and put forward that Chongqing will be built into an important growth pole in West China, an economic center in the region of the upper reach of Yangtze River and a municipality with development of urban and rural areas as a whole in an expedite manner so as to take the lead in achieving the target of establishment of moderately prosperous society in West China. In June 2007, approved by the State Council, the National Development and

Reform Commission formally approved Chongqing as the national reform and experimental area of comprehensive complementation of rural and urban area as a whole, which is another significant strategic development opportunity for in its 10th year since it became a municipality directly under the Central Government.

I. Economic Overview

Broad Market Space

The administrative area of Chongqing is 82,400 square kilometers and the population is 32 million. It has a vast local market and powerful radiation ability on the neighboring provinces and cities, covering a peripheral market with a population of 300 million.

Dual Economic Structure

The dual economic structure of the coexistence of big urban and rural areas makes Chongqing have not only modern industry and service but also the agriculture with abundant products, which provides extensive cooperation field and numerous business opportunities.

Rapidly growing economy

From 1997 to 2006, the annual average growth rate of GDP in

Chongqing is more than 10% and the annual average growth rate of fixed assets is more than 20%, keeping a relatively long economic growth period. GDP in Chongqing in 2006 reached RMB 348.62 billion, up 12.2%; Investment on fixed assets of the whole society reached RMB 245.184 billion, up 24.9%; Total amount of export and import was US$ 5.47 billion, up 27.4%, including US$ 3.35 billion for export of foreign trade, up 33%; actual utilization of foreign capital valued US$ 700 million, up 34.9%. The export amount of foreign trade from January to April in 2007 reached US$ 1.23 billion, up 26.5% over the same period of last year, and the paid-up foreign capital valued US$ 190 million, up 37.6%.

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Foreign investment: coming in a continuous stream

Foreign relationship/presence Chongqing has established economic and trade relations with 180 countries and regions. Britain, Canada,

Japan, Denmark and Cambodia have established consulates in

Chongqing; Austria and Germany have established agencies of chambers of commerce in Chongqing. By the end of April 2007, the total number of foreign investment enterprises approved by

Chongqing Municipal Government is up to 4,246. 71 of Fortune Top

500 enterprises including Ford, BP, Ericsson, ABB, Lafarge, Carrefour,

Metro, Isuzu Motors and Suzuki Motor have established their presence in Chongqing. Sound Industrial Base

Chongqing is one of the six old industrial bases in China. It has a sound industrial base, with a complete range of industries and strong supporting capacity. Industry is the dominant force in national economy in Chongqing. There are 100,000 industrial enterprises. In

2006, the industrial added value in Chongqing was RMB 123.4 billion, up 18%. At present, six large key industries in Chongqing have been formed and cultivated, i.e. automobiles and motorcycles, petroleum and natural gas chemistry, equipment manufacture, new materials, high-tech and labor-intensive industry.

Gross Industrial Output Values in Chongqing (1997-2006)

3500 40.00% 3000 30.00% 2500 20.00% 2000 10.00% 1500 1000 0.00% 500 -10.00% 0 -20.00% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Gross Industrial Output Values(RMB 100 million) Growth Rate

——Auto Famous City in China

The production capacity of automobiles of Chongqing ranks the third place in the country. The production and sales volume of all kinds of automobiles reaches 790,000 in 2006. The categories of automobiles are complete, including heavy trucks (represented by

Hongyan Motor), light trucks (represented by Qingling light trucks), saloon cars (represented by Changan-Ford Motor and Changan-

Suzuki Motor), passenger cars (represented by Chongqing Passenger

Car Factory) and mini-type car (represented by Changan mini-type car).

——Capital of Motorcycle in China

The annual production capacity of motorcycle in 2006 reached 7.5 million, ranking the first place in China. There are famous brands including Jialing, Jianshe, Longcin, Zongshen and Lifan. The export volume accounts for one third of the total export volume of Chinese motorcycles.

——Important City of Chemical Industry in China

The chemical industry mainly includes natural gas and salt chemical.

The main enterprises include Sinopec Sichuan Vinylon Works, and its joint venture with BP Yangtze River Acetyls Co., Ltd, Changshou

Chemical Works, Agrochemical Group and Jianfeng Chemical

Factory. Salt chemical enterprises mainly include Wanzhou Salt

Group.

It focuses on the development of these three industries including natural gas chemical industry, chlorine alkali chemical industry and petroleum chemical industry and forms six product chains including natural gas methanol, natural gas acetic acid, natural gas acetylene, chlorine alkali, fine chemical industry and new materials. Chongqing has become the natural gas chemical industry base with the largest scale, most complete categories of products and most advanced technology all over the country. The Yangtze River Acetyls Co., Ltd, invested by BP is the largest production base of acetic acid in West

China. Chongqing will build the largest comprehensive chemical industry base and world-class natural gas chemical industry base at the upper reach of Yangtze River in the future.

——Processing Base of Aluminum Material in Asia

Southwest Aluminum (Group) Co., Ltd. is a comprehensive and extra-large aluminum processing enterprise with largest production scale, most advanced technical equipment and most complete categories and specs in China, China’s aluminum materials base for aviation and spaceflight, production base of high and fine aluminum plate with foil, export and processing base of aluminum materials, with an annual production capacity of 400,000 tons of various aluminum profiles.

II. Investment Advantages

Enrichment of Favorable Policies

Favorable policies in Chongqing are the superposition of national general favorable policies, favorable policies for West China and favorable policies for Three Gorges Reservoir Area. It has an obvious policy advantage. Industrial enterprises enjoy the favorable policy of 15% of the income tax for enterprises and the tax rate is

10 percentage points less than that in East and Central China; the income tax imposed on foreign enterprises can be exempted for two years and paid in half for three years since the year of making profit.

In addition, when the number of migrants, lay-off workers or disables employed reaches a certain proportion, the enterprises can enjoy related favorable policies. There will be RMB 55 billion investment from national and local finance departments in the Three

Gorges Reservoir Area in the future five years and favorable policies are accessible for the investment in the Three Gorges Reservoir

Area.

System of Municipality Directly under the Central Government

The political and economic status of municipality directly under the

Central Government is relatively high in China. It has approval jurisdiction at provincial level, so it has a few approval sectors and high working efficiency. Chongqing is one of the four municipalities directly under the Central Government in China and enjoys various administrative rights and legislative rights granted by the State to the municipality. It possess unique advantages of system of municipality directly under the Central Government in the aspects of policies.

Advantages of Location and Traffic Chongqing is the only municipality directly under the Central

Government in West China and located in the geometric center in the territory of mainland China. It is the combination part of economic developed area in East China and resources enrichment area in West

China. It has location advantages of connecting of West, East, South and North China and has access to rivers and seas. It will be formed

as the comprehensive traffic hub at the upper reach of Yangtze River.

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By 2010, 2,000 kilometers of expressway framework with “two circles and eight radiating lines” and 2,000 kilometers of railways with “one circle and nine radiating lines” will come into being.

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Chongqing is the shipping center at the upper reach of Yangtze River and the largest port linked to the sea in West China. By 2010, the throughput capacity of cargos in ports in Chongqing will reach 125 million tons, 1.6 million TEU of container and 760,000 vehicles of automobile Ro/Ro.

Throughput capacity of the cargos of the ports will reach 120 million tons. After the completion of construction of the Three Gorges

Reservoir, an 18,000-tonnage fleet with a single ship of 3000- tonnage can directly arrive at Chongqing.

The throughput volume of passengers of the airport will reach 16 million person times by 2010. Jiangbei International Airport is the national airport as a trunk and hub in China. The length of the runway is 3,200 meters, airplanes of any type can land and take off in this airport, and the area of terminal building is 100,000M2. There are also branch airports including Wanzhou Airport and Qianjiang

Airport. There are 53 domestic routes which have been open to traffic in Chongqing, and 13 cross-boundary routes to Nagoya,

Tokyo (Japan), Seoul (Korea), Düsseldorf (Germany), Hong Kong,

Macro, Bangkok, Singapore and Kuala Lumpur.

Strong comprehensive service function

As the largest central city and important town for industry and commerce in West China, the population of the city proper of

Chongqing has exceeded 5 million, which presents a strong function of comprehensive service in urban area. There are over 400 wholesale markets of all kinds radiating more than 300 million persons in peripheral areas. The construction of modern business facilities ranks the first place in West China; convenient and fast inspection and quarantine system for export and import commodities and high efficient capacity for passing customs are accessible.

Low factor cost and powerful guarantee Factors such as land and energy resources in eastern regions are in short supply and the construction cost and costs of production and operation remain increasing, the advantages of production factor cost of Chongqing become more prominent. At present, the average land price in Chongqing is only about 33% of that in eastern region.

The prices of electricity, gas and water for industrial use are only 60-

70% of that in eastern region, labor cost is about 60% of that in eastern region and comprehensive cost of production factors of all kinds is only 50-60% of that in eastern region.

The proved-up reserves of natural gas in Chongqing are 370 billion cubic meters, accounting for one fourth of the total reserves all over the country. The existing two pipelines of refined oil and two pipelines of natural gas made Chongqing becomes the important base of crude oil and natural gas supply in West China. The Three

Gorges Reservoir Area will become the largest manmade freshwater resources reservoir in the world, capable of storing 39.3 billion cubic meters. As for the minerals in Chongqing, the reserves of strontium salt (strontium carbonate and strontium sulfate) ranks the third place all over the world. The reserves of manganese ore and aluminum ore are also very rich. Coal can be self-supported. Chongqing is becoming the national important collection and transportation base of energy sources including petroleum, natural gas, electricity and coal. Powerful financial supporting capability

The categories of financial institutions in Chongqing are complete.

Number of foreign financial institutions and outlets of financial institutions and density of employees come top in Central and West

China. 6 foreign banks including Sumitomo, HSBC, Po Sang Bank,

Bank of Nova Scotia, Philippine Allied Bank, ABN AMRO Bank,

BEA have established their presence in Chongqing; overseas insurance companies including Liberty Mutual, Metlife, Great

Eastern, Yasuda insurance (Japan) and Sun Life Assurance (Canada) have established branches (subsidiaries) or offices in Chongqing.

Chongqing is the important center of bill settlement in West China. It has the most active trading on bill market, lending market and bond market in Central and West China. Growth of insurance fees is far higher than that of the average level all over the country in consecutive four years and the depth and density of insurance is in a leading place in Central and West China. The financing environment is relaxing and the balance of loans per capita is RMB 15,400. The ratio of deposit to loan of the bank keeps at around 80% and the rate of bad assets of financial institution is only 6%. In the future 10 years, Chongqing will be built into the financial center at the upper reach of Yangtze River. Rich resources of science and education

Chongqing now has 57 colleges and universities with a total number

of nearly 600,000 undergraduates and 356 secondary vocational and

technical schools with a total number of 450,000 students.

Universities and secondary technical schools feed over 300,000

professional of all kinds to the society annually. Chongqing has

become an important base of talent supply in West China. There are

totally over 1,000 R&D institutions of all kinds all over the city

including 100 R&D institutions at municipal level or above level and

more than 700,000 professional technicians of all kinds.

III. Comparison of Comprehensive Factor Cost

Comparison of comprehensive costs

S/N Items Unit Data Beijing Shanghai Tianjin Chongqing Guangzhou Nanjing Changchun Comprehensive average RMB/square 1 3393 3416 1785 1175 2635 3613 1167 land price meter Electricity for industrial RMB/kilowatt 2 0.68 0.69 0.74 0.5 0.77 0.85 0.7 use hour RMB/cubic 3 Gas for industrial use 1.95 2.1 2.1 1.24 2.9 2 1.8 meter RMB/cubic 4 Water for industrial use 5.6 5 4.6 3.35 2.46 2.65 4.6 meter Average salary of 5 RMB 28348 24396 17810 14357 30807 26063 15722 employees

Low land cost

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Data Source: Administrative Department of Land-use of the Ministry of Land and Resources- Dynamic Monitoring System of Urban Land Price in China

Comparison of comprehensive construction cost

The cost in Chongqing is RMB 260㨪350 per square meter less than that in Shanghai and Tianjin

The cost in Chongqing is RMB 250㨪350 per square meter less than that in Nanjing.

Low labor cost

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IV. World Top 500 Enterprises in Chongqing World Top 500 enterprises in Chongqing˄as of the end of 2006˅ World Top 500 Enterprise in Chongqing Sector enterprises Motorcycle and parts 1. Honda corporate 1. Jailing-Honda Engine Co., Ltd manufacturing

Automobile and 2. Qingling Motors parts manufacturing 3.Chongqing Qingling Casting Auto parts Co., Ltd manufacturing 4.Chongqing Qingling Mould Auto parts Co., Ltd manufacturing

5. Chongqing Qingling Plastic Auto parts Co., Ltd manufacturing

6. Chongqing Qingling NHK Auto parts

Seat Co., Ltd manufacturing

7. Chongqing Qingling Axle Co., Auto parts

Ltd manufacturing

8. Chongqing Aluminun Alloy Auto parts Casting Co., Ltd manufacturing 9. Chongqing Qingling Forging Auto parts Co., Ltd manufacturing 10. Chongqing Qingling Auto parts Technical Centre manufacturing 11. Chongqing Tokyo Radiator Auto parts Co., Ltd manufacturing 12. Chongqing Shiqi Meter Co., Auto parts 2.Isuzu Motors Ltd manufacturing 13. Chongqing Changan Suzuki Auto parts 3. Nissho Iwai Automobile Co., Ltd manufacturing 4. Suzuki Motor 14. Chongqing Wangjiang Auto parts Suzuki Engine manufacturing 5. Sumitomo Metal 15. Chongqing Four-partners Tooling 6. Mitsubishi Heavy Continuous Casting Co., Ltd manufacture Industry Auto parts 7. Denso 16. Chongqing Denso manufacturing 17. Yangtze River Acetyls Co., Crude 8.BP Ltd Chemicals 18. ABB Chongqing Electric Transformer Co., Ltd 9. ABB 19. ABB Chongqing Jiangjin Turbocharger Turbo Systems Co., Ltd Manufacturer 20. Chongqing Tianfu Cola Beverage Yulong Foods & Beverage Co.,

Ltd 21. Chongqing Pepsi-Tianfu Beverage Beverage Co., Ltd 22.

Chongqing Huamei Foods Beverage

Beverage Co., Ltd 10. Pepsi Cola 23. Chongqing Carrefour

Hypermarket Chain Store Co., Retail 11. Carrefour Ltd 24. Ericsson Communication Telecom (Chongqing) Co., Ltd Equipment 12. Ericsson 25. Chongqing Ericsson Telecom Technology Co., Ltd Equipment 26. Metro Warehouse 13. Metro Retail Management Co., Ltd 14. Ford Motor 27. Changan Ford Mazda Automobile Co., Ltd Auto/ parts 28. Chongqing Ante Import & manufacturing 15. Japan Mazda Motors Export Tradings and sales

Building 29. West Gypsum (Chongqing) Materials 16. France Lafarge Co., Ltd

30. Chongqing Lafarge Cement Building Co., Ltd Materials 31. Chongqing Sino French Water Supply Co., Ltd Water works 17. Suez Group 32. Chongqing Sino French Investment in Water Works Investment Co., urban water Ltd supply 33. Chongqing Changan 18.APL Logistics Mingsheng Distribution Co., Ltd Logistics 34. Chongqing Lear Changan

Automobile Interior Trim Co., 19. Lear China Ltd Auto parts Ltd 35. Chongqing Qianwei 20.Krommschoder Krommschoder meter Co., Ltd Instrumentation 21.Kerry Group (part of 36.Chongqing Coca Cola Share held by Coca Cola Beverage Co., Ltd Beverage

37. Chongqing Yanfeng-Johnson 22. Johnson Control Auto parts Seat Co., Ltd manufacturing

38. Robust (Chongqing) Foods 23. Danone Group Food & & Beverage Co., Ltd beverage

39. Hutchison Enterprises (Chongqing) Co., Ltd Real Estate

40. Hutchison Whampoa

Property (Chongqing Nanan) Real Estate Co., Ltd

41. Hutchison Whampoa Property (Chongqing Jiangbei) Co., Ltd Real Estate

42. Hutchison Optel Telecom Optical fiber Technology Co., Ltd telecom 43. Hutchison Whampoa

Property (Chongqing Economic Real Estate Development Zone ) Co., Ltd 44. CSG TRW Chassis Systems 25. ˄TRW˅China Auto Parts Co., Ltd 26. Mitsubishi 45. Chongqing Kinglong Fine Crude Corporation Strontium Chemical Co., Ltd chemicals 27. Sumitomo 46. Chongqing Sumitomo Corporation Yunxin Logistics Co., Ltd Road transport 28. Mitsui Corporation 47.Chongqing Monorail Transit Rail transit Engineering Co., Ltd 29. Hitachi

48.Warner Szitic Cinemas 30.Warner Bros HK (Chongqing) Co., Ltd Entertainment 49.Chongqing B&Q Building Building 31.UK Kingfisher Group Material Co., Ltd Material Sales Auto parts 50.Chongqing Changan Engine manufacturing management system Co., Ltd

51.Visteon Automobile A/C Auto parts

system( Chongqing) Co., Ltd manufacturing

52.Yanfeng Visteon Automobile Auto parts Interior Trim( Chongqing ) Co., 32.Visteon Corporation manufacturing Ltd 53.Chongqing Dongyin Shell 33.Shell china Others Petroleum & Chemical Co., Ltd 54.Canada Scotia Chongqing 34.Scotia Bank Banking Branch 35.HSBC 55.HSBC Chongqing Branch Banking 56.ABN Amro Chongqing 36.ABN Amro Banking Branch 57.Liberty Mutual Chongqing 37.Liberty Mutual Insurance Branch 38.Metlife 58.Metlife Chongqing Branch Insurance